Get Wonkbook delivered to your inbox or mobile device every morning. It's everything you need to know about domestic and economic policy (and some stuff you don't).Subscribe now.

S&P 500 Hovering Around 1,000 For First Time Since November -- What's it Mean?

On Tuesday, the Standard & Poor's 500 stock index closed above 1,000 for the first time since November, a noteworthy benchmark.

It has been hovering around 1,000 all week and closed down half of 1 percent at 997 today.

What does it mean?

The S&P 500 has ridden the surge of the markets since bottoming in early March. Since then, the S&P 500 has zoomed up about 47 percent. (The Dow is up 40 percent; the tech-heavy Nasdaq, up about 55 percent.)

Most agree this is an unsustainable surge. There already has been a sideways move in early June and then a dip in July before the rise continued. Still, the 1,000 mark -- even if it's not sustained for good -- is an important level on the road to recovery.

The S&P 500 peaked at 1,565 along with the rest of the markets in early October 2007. By October 2008, it was down below 1,000. It enjoyed a brief rally, poking its head just above 1,000 on November 4. After that it was downhill until the March 9 bottom at 676.

On Tuesday, the S&P 500 closed at 1,002.

The S&P 500 is made of up 500 companies, from Alcoa to Hasbro to Yum! Brands, as opposed to the much narrower Dow Jones Industrial Average, which has only 30 of the biggest companies.

As such, the S&P 500 is a better gauge of the overall health of the economy.

The 1,000 milestone prompted former Fed Chairman Alan Greenspan to practically turn handsprings, telling Reuters he thinks the economy has hit bottom. Then again, this was the guy who -- for all his many gifts -- said under testimony last fall that a) he didn't see the housing crisis coming and b) now realizes his lifelong belief in the self-regulation of markets was wrong.

The 1,000 mark probably will spur average investors, who've been on the sidelines, to venture back into the markets, Stuart Frankel managing director Steve Grasso said on CNBC on Monday. Those additional buy orders, by their nature, should push the S&P 500 even higher.

However, a look at the activity on the markets themselves shows less optimism. A lot of traders are shorting the S&P 500, meaning they believe it won't climb much higher than 1,000 anytime soon. A number of traders expect resistance at about the 1,016 level, possibly followed by a dip back below 1,000 before a recovery begins.

The S&P 500 is “moving too fast in too short a period of time,” Wayne Wilbanks, chief investment officer at Wilbanks Smith & Thomas, told Bloomberg today. “Whether it’s oil or health care as the cause, we’re so due for a 20-point drop in the S&P.”

Finally, we checked in with Bill Gross of Pimco Research, a smart and cautious bull, who, in a recent note, did not comment directly on the S&P 500 but drew up some gloomy stats on the overall economy that will drive the S&P 500 and all markets for the remainder of the year, at least.

Gross says the U.S. may have to get used to 3 percent GDP, as opposed to the accustomed-to 5 percent. And that's bad news.

This means: "A 3% nominal GDP 'new normal' means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model," he wrote.